Member Article

Markets bounce; US employment data better than expected

Having not announced anything tangible at yesterdays ECB meeting and press conference, markets were initially disappointed by Mario Draghi’s apparent inaction. However after the knee-jerk sell-off in yesterday’s session, it appeared investors reassessed Mr Draghi’s words last night and found something in them reassuring. It is possibly the shift in stance from the eurozone’s central bank, which has appeared to alter the parameters of its mandate as it now determines the unsustainably high bond yields of peripheral eurozone nations to be within its remit. The change in rhetoric from merely price stability to bond purchases is after all reassuring.

Certainly helping sentiment was employment data from the US as July’s non-farm payrolls came in stronger than expected. The headline figure was 163,000 more jobs, ahead of the 100,000 that were anticipated. Despite the unemployment rate ticking up to 8.3% from 8.2%, market rallied with those in Europe up around 2%.

Missing out on the euphoria was International Consolidated Airlines Group, the owner of British Airways and Iberia, as shares fell in response to a disappointing tone in its half year reports that showed losses that exceeded forecasts. Shares closed the day down more than 5%.

The FTSE 100 kept climbing through the day, adding 125 points, or 2.2%, to finish at 5787. The CAC and DAX were the biggest beneficiaries of the rally, up 4%. Oil was also up around 3% (Brent crude), with the euro climbing up nearly 2% against the dollar as confidence about a resolution to the regions crisis improved.

This was posted in Bdaily's Members' News section by James .